Research On The Reducing Behavior Of Major Shareholders Of Mengjie Company Under The New Regulations On Reducing Holdings

In the early stages of capital market development,non tradable stocks cannot be freely traded.After the completion of the stock reform in 2007,the Chinese stock market ushered in an era of full circulation of stocks.After the stock reform,non tradable shareholders of listed companies can freely buy and sell stocks in the trading market,and major shareholders will reduce their holdings of stocks to gain profits with the circulation of prohibited stocks.However,the existing legal regulations and regulatory system are not perfect,which provides some major shareholders with the opportunity to use their information advantages to reduce their holdings in disguised form.The behavior of major shareholders not only damages the development and reputation of the company,but also undermines the confidence of small and medium-sized investors in the securities market,deviates from the original intention of activating the securities market through stock reform,and endangers the healthy and stable development of the capital market.The profit mechanism of shareholders has also shifted from initially focusing on developing the company’s operating profits to the development of stock prices in the secondary market.Small and medium-sized investors are in a disadvantaged position in the capital market,and their interests are susceptible to the influence of major shareholders.In order to ensure the legitimate rights and interests of investors,in May 2017,the China Securities Regulatory Commission issued new regulatory rules on shareholders of listed companies.At the same time,various new paths for major shareholders to reduce their holdings have emerged in the capital market to avoid new rules.This article selects the reduction behavior of major shareholders of Mengjie Company as a case study for analysis,because Mengjie Company has rapidly developed into a leading enterprise in the textile industry since 2015,but its profits have declined since 2017.During the period from 2017 to 2020,the major shareholders of Mengjie Company carried out multiple large-scale reduction actions,and due to the particularity and typicality of their reduction actions,Mengjie Company caused heated discussions in the capital market.Taking the introduction of the new regulations on reducing holdings in 2017 as the background,this paper first analyzes the current situation and problems of reducing holdings by major shareholders in China,as well as the methods of reducing holdings.It also sorts out the system of reducing holdings by major shareholders in China.Secondly,the focus of the study is on the reduction behavior of major shareholders of Mengjie Company under the new regulations,which includes the reasons for the reduction,the reduction path under the new regulations,and the impact after the reduction.Research has found that Jiang Tianwu,the major shareholder of Mengjie Company,separated from his wife as a concerted action person after their divorce in 2017.His wife Wu Jing obtained equity after the divorce and began to reduce her holdings along the way.In2020,she combined marketing with the concept of internet celebrity to push up the stock price and reduce her holdings accurately.These operations have all circumvented the new regulations on reducing holdings.Finally,relevant suggestions are proposed based on the problems existing in the reduction of shares by major shareholders of Mengjie Company including strengthening supervision of relevant entities,strict law enforcement,implementing effective regulatory measures,and severely disposing of entities that violate laws and regulations in accordance with the law.In addition,enterprises also need to carefully comply with relevant laws and regulations to ensure their legitimate operation.External investors should also invest rationally.